{"id":49578,"date":"2022-09-23T16:30:04","date_gmt":"2022-09-23T14:30:04","guid":{"rendered":"https:\/\/libmod.de\/?p=49578"},"modified":"2022-09-27T16:56:33","modified_gmt":"2022-09-27T14:56:33","slug":"energy-security-in-ukraine","status":"publish","type":"post","link":"https:\/\/libmod.de\/en\/energy-security-in-ukraine\/","title":{"rendered":"Energy Security in Ukraine"},"content":{"rendered":"

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Foto: Imago \/\u200b Ukrinform<\/figcaption><\/figure>\n

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The second series of input papers for the project \u201cEastern Partnership Plus\u201d deals with the question of the depen\u00addence of the three associated countries on energy imports and a better integration into the European energy market.<\/h2>\n

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Olena Pavlenko, DiXi Group<\/em><\/p>\n

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The destruction of <\/strong>Ukraine\u2019s<\/strong> energy sector has been a goal in Russia<\/strong>\u2019s <\/strong>war against Ukraine from the start<\/strong>. This involves, firstly<\/em>, the attempt to wreak the maximum destruction on the country\u2019s energy infra\u00adstructure (power grids and gas pipelines) with the aim of cutting off the energy supply of as many Ukrainian consumers as possible. There have been days during the war when as many as a million consumershad no access to electricity, though Ukrainian energy companies were able to re-estab\u00adlishe service swiftly.Secondly,<\/em> the seizure of strategic energy facil\u00adities \u2013 the Kakhovka HPP, the Chernobyl NPP and the Zapor\u00adizhzhya NPP, has been a priority of Russian forces. The behaviour of Russian troops at the captured facil\u00adities makes it clear that they do not under\u00adstand how dangerous the conse\u00adquences of their actions there could be \u2013 they walked around in the areas conta\u00adm\u00adi\u00adnated by high radiation at the Chernobyl station, andRussian units have fired rockets over the Zapor\u00adizhzhya nuclear power plant at very low altitudes. It is unlikely that Russia plans to fully develop these facil\u00adities \u2013 rather, its behaviour suggests that its seizure of power\u00adplants is aimed at black\u00admailing Ukraine and the world. Thirdly<\/em>,<\/em> Russia has stepped up the frequency of its cyber-attacks on Ukrainian energy facil\u00adities. The number of cyber-attacks has tripled during first phase of the war. There were more than 300,000 cyber-attacks during the first 80 days of the war. Ukraine has amassed anincredible amount of experience in cyber warfare and is now in a position to train other countries, including EU countries, in cyber defence. Fourthly<\/em>,<\/em> Russia has tried to leave Ukraine completely without fuel. In addition to blocking fuel imports, it destroyed many of Ukraine\u2019s fuel storage facil\u00adities. This was the most painful blow. Ukraine is only now returning to a stable fuel situation. As a result of Russian aggression, as of the fifth of June<\/a>, almost 5% of the installed electricity gener\u00adating capacity had been destroyed, and 35% of gener\u00adating capacity is now in terri\u00adtories occupied by Russia.<\/p>\n

Despite<\/strong> the doubts of some<\/strong>, Ukraine\u2019s energy system has shown a high level of resilience<\/strong> in<\/strong> the <\/strong>face of Russia\u2019s war<\/strong>.<\/strong> Ukraine\u2019s electricity system<\/em> was discon\u00adnected from Russia and Belarus<\/a> on the day that the war broke out. For three weeks, it supplied electricity to consumers while operating in isolation, giving the lie to pessimistic predic\u00adtions from many European experts. On 16 March 2022<\/a> Ukraine\u2019s electricity system was synchro\u00adnized with the European ENTSO\u2011E system, and on 7 June 2022<\/a>, the EU trans\u00admission system operators agreed to open commercial trading between Ukraine and the EU. The Ukrainian grid operator Ukrenergo believes<\/a> that exporting electricity to the EU may become one of its most profitable economic activ\u00adities, as prices in Ukraine today are three times lower than those in Europe. This will help to reduce the illiq\u00aduidity of the Ukrainian energy market and attract investment to it in the future.<\/p>\n

Ukraine has also shown a high level of resilience in the gas sector<\/em>. Despite repeated cases of destruction of local gas pipelines, Ukrainian companies have been able to resume supplying gas to Ukrainian consumer\u00adspromptly. Ukraine was able to make it through the heating season success\u00adfully<\/a>. It is important to note that Russia has consis\u00adtently refrained from firing on the gas pipelines that transport gas to the EU. This is further evidence of the impor\u00adtance that Russia attaches to maintaining gas supplies, and it also helps explain why Putin was so eager to launch Nord Stream 2 \u2013 the avail\u00adability of the bypass pipeline would give the Russian forces free reign for shelling strategic Ukrainian facil\u00adities in the gas sector and beyond. At this point, I wish to point out that Ukrainian experts consis\u00adtently empha\u00adsized this risk at public discus\u00adsions in Germany and in other countries during the construction of Nord Stream 2.<\/p>\n

Turning now to oil and oil products<\/em>: before the war, Ukraine was dependant on imports from Russia and Belarus for more than 60% of<\/a> its petroleum needs. Of the three sectors discussed here, the oil sector proved to be the least resilient. Belarus and Russia blocked oil and fuel exports to Ukraine immedi\u00adately after the war began. In response, the Ukrainian government began to import more of these products from the EU. However, Russia has attempted to destroy Ukraine\u2019s capac\u00adities for refining and for storing oil and other fuels \u2013 Russian missiles have wiped out 27 oil depots<\/a> in different regions of Ukraine. Russia also fired 20 missiles<\/a> at theKre\u00admenchug refinery plant, rendering it inoperable. The country has lost its infra\u00adstructure. To facil\u00aditate fuel imports from the EU, the government has liber\u00adalized prices<\/a> on the oil market and simplified all import proce\u00addures. In June, there was a severe shortage of fuel in Ukraine, but the situation grew more stable toward the end of the month. It is difficult to say how Ukraine might have prevented the crisis and protected its infra\u00adstructure to avoid the physical destruction of depos and refineries, but one of the biggest lessons learned with regard to the oil sector is that Ukraine must never again become dependent on fuel imports from Russia and Belarus.<\/p>\n

Facing<\/strong> the <\/strong>threat<\/strong> of a long-term war, the government is now focused on the rapid resumption of <\/strong>opera\u00adtions in <\/strong>the energy system. <\/strong>Today, infor\u00admation on the share of total electricity production generated by particular energy sources is not released due to security concerns, but it is known that<\/a> nuclear power together with wind\u2011, solar- and hydro-power account for almost 90% of total electricity production (meaning that electricity gener\u00adation from coal is just over 10%). Nuclear power<\/em> remains the main source for electricity production, despite the occupation of two nuclear power plants. The Chernobyl plant was liberated in early April, while the Zapor\u00adizhzhya nuclear power plant is still under Russian occupation. This is the first act of this kind of aggression in the world; the Ukrainian government has already described<\/a> Russia\u2019s actions as \u201cnuclear terrorism\u201d. This situation demands an additional response from the world, which should seek to limit furtherde\u00advel\u00adopment of the nuclear sector in Russia and prevent the sector from sharing its technologies abroad. This situation has also shown that the IAEA is not able to act in a truly effective manner to ensure nuclear safety in the world: there is a need to discuss deep reform of such bodies in the future.<\/p>\n

To reduce Ukraine\u2019s depen\u00addence on Russian nuclear energy, the state-owned Energoatom and the US company Westing\u00adhouse have signed an agreement<\/a> in June 2022 to increase the number of AP1000 nuclear power units in Ukraine from 5 to 9. There is also an agreement to increase the volume of American nuclear fuel supplies to cover the needs of all Ukrainian NPPs. In addition, the companies confirmed their intention to establish a Westing\u00adhouse engineering and technical centre in Ukraine.<\/p>\n

Ukraine\u2019s coal reserves <\/em>were at a low level as it entered the 2021\u20132022 heating season, and many experts had criti\u00adcized the government for failing to prepare effec\u00adtively for the winter. However, Ukraine built up its reserves quite quickly during the wintertime and as it prepared for synchro\u00adnization with ENTSO\u2011E. As of the beginning of the war, the country\u2019s coal reserves were in line with planned levels, but coal production fell by 30%<\/a> after the war started and Russia destroyed several mines. In prepa\u00adration for the upcoming heating season, the Ukrainian government has banned<\/a> all exports of coal, oil fuel and gas. It expects to have amassed 2\u20133 million<\/a>tons of coal in its warehouses by October 2022. There is also another radical change that has taken place in the coal sector: unlike in previous years, there is no public confrontation today between the government and the companies in this sector, including private energy companies.<\/p>\n

The renewable energy sector<\/em> was also badly damaged during the war. As of 5 June,<\/a> about 30% of the country\u2019s solar-power capacity and over 90% of its wind-power capacity had been destroyed. Also, renewable energy producers have not been receiving the feed-in payments they are entitled to under the Green Tariff scheme (only 10% is being paid out according to some estimates<\/a>), driving them into insol\u00advency. And because many of the solar and wind gener\u00adation facil\u00adities are located in the east and south of Ukraine, many have come under fire and lost capacity due to missile damage.<\/p>\n

In the gas sector<\/em>, Ukraine now consumes almost as much gas as it produces, due to a rapid fall in consumption, of 30% or even more<\/a>, after the start of the war. Ukrainian gas storage facil\u00adities still held about 9 billion cubic metres<\/a> at the end of the heating season. Ukraine has not yet imported gas from the EU. This will likely change as the country begins to prepare for the heating season. Though, Naftogaz believes that<\/a> Ukraine will not need to import large quantities of gas. The government has begun negoti\u00ada\u00adtions to purchase gas in various countries, including Norway<\/a>, poten\u00adtially \u2013 in the form of liquefied natural gas<\/a>. The European Bank for Recon\u00adstruction and Devel\u00adopment will provide the NAK Naftogaz<\/a> with a loan of 300 million euros, the first 50 million of which will go to emergency gas purchases.<\/p>\n

Ukraine also continues to transport Russian gas to Europe. Some Ukrainian and European experts have suggested that Ukraine stop trans\u00adporting gas on its own initiative but doing so would put Ukraine in breach of commit\u00adments primarily to European companies and European consumers, and Russia would use any such act to accuse Ukraine of being an unreliable partner. Therefore, the Ukrainian TSO (Trans\u00admission System Operator) could only stop the transport if European companies first took the appro\u00adpriate decision.<\/p>\n

The Ukrainian route remains the primary route for trans\u00adporting Russian gas to Eastern and Western Europe. Poland termi\u00adnated its gas agreement<\/a> with Russia on the Yamal-Europe gas pipeline in May 2022. Nord Stream 2 was completed in October 2021 but was not put into operation \u2013 German Chancellor Olaf Scholz announcedat the press conference<\/a> on 22 February 2022 that Nord Stream 2 certi\u00adfi\u00adcation had been suspended after Russian President Vladimir Putin issued a statement recog\u00adnizing individual states in Ukraine. Russia uses the Nord Stream 1 gas pipeline as a tool for political manip\u00adu\u00adlation \u2014 gradually reducing the volume being trans\u00adported through it, and blaming<\/a> this on, for instance, the sanctions preventing Siemens from returning an overhauled compressor from Canada. By reducing gas supplies through the Nord Stream 1 gas pipeline, Russia does not want to increase gas trans\u00adportation through Ukraine. At the same time, the Ukrainian Gas Trans\u00admission System Operator has been proposing that gas flows be rerouted through Ukrainian terri\u00adto\u00adrysince the beginning of the war, as the Ukrainian pipeline has free and Gazprom-reserved capacity<\/a>. Unfor\u00adtu\u00adnately, neither European companies nor Russia have listened to or discussed these proposals.<\/p>\n

Strength\u00adening the sustain\u00adability of Ukraine\u2019s energy sector in the medium term means large business invest\u00adments and further integration into the EU energy sector<\/strong>.<\/p>\n

Ukraine needs an EU policy that will enable it to receive aid but also allow it to become an equal partner. This means creating the condi\u00adtions for the energy sector to become more liquid and generate more electricity. The EU can help to increase electricity exports from Ukraine<\/em> and avoid creating<\/em> obstacles in the form of CBAM regulation for Ukraine<\/em>.<\/p>\n

It also means that the EU and US govern\u00adments need to develop policies that will help attract foreign investment in electricity gener\u00adation in Ukraine<\/em>. Ukraine will not be able to offer a new set of programs to support renewable power gener\u00adation, due to the lack of liquidity on its electricity market and high level of energy poverty (which will increase even further after the war). As Ukraine can\u2019t develop support programs for the renewable sector on its own, the EU countries can help in this.<\/p>\n

Also, Ukraine \u2014 as a candidate country for EU membership \u2013 can be recog\u00adnized as a full member of the European Green Course and gain access to European funds<\/em>. Ukraine has clearly defined the goal of decar\u00adbonization and must achieve this goal from a much more difficult starting position than any other EU member state. The possi\u00adbility of receiving additional financial support will allow the country to make swifter progress in this direction.<\/p>\n

Increasing energy efficiency is a policy aim that would be supported by any government and all consumers. But improving energy efficiency will require<\/em> many more mecha\u00adnisms<\/em> (for house\u00adholds, cities and commu\u00adnities, and companies) than <\/em>currently exist.<\/em> And these mecha\u00adnisms must be very simple and trans\u00adparent. The EU can help both in the devel\u00adopment of such mecha\u00adnisms and by providing the necessary funds.<\/p>\n

In the gas sector, Ukraine must remain the main transit country for Russian gas \u2013 and Nord Stream 1 should be stopped<\/em>. It is already clear that the transport of Russia gas through Ukraine has an inhibiting effect on the level of Russia\u2019s armed aggression \u2013 and will continue to do so, at least so long as Russia remains inter\u00adested in exporting gas to the EU. Ukraine does not manip\u00adulate technical problems for its own purposes, as Gazprom does with offshore gas pipelines. Also, Ukrainian gas storage facil\u00adities should be made a full<\/em>y-<\/em>fledged part of the EU\u2019s energy security archi\u00adtecture<\/em> \u2014 European companies should store gas in them for the winter, and EU regula\u00adtions should provide for this. The EU can also provide funds to increase the capacity of inter\u00adcon\u00adnectors between Ukraine and Poland and Slovakia. <\/em>This will ensure better gas flows between countries and the ability to respond to crises more quickly.<\/p>\n

Moreover, if the EU is seriously thinking about granting EU membership to Ukraine in the future, Ukrainian politi\u00adcians and government officials can already start to attend meetings and discus\u00adsions of EU energy policy \u2014 for example, meetings of energy ministers<\/em>. This would allow a better under\u00adstanding of EU prior\u00adities and a faster synchro\u00adnization of Ukraine\u2019s and the EU\u2019s energy security policies in the future.<\/p>\n

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